Investors Trading on Feelings, Not Facts: Emily Roland

Emily Roland, Co-Chief Investment Strategist at John Hancock Investment Management, discusses continued signals from global bonds about US debt and whether or not it's just another warning signal that will pass. She speaks with Bloomberg's Tom Keene and Damian Sassower.

Global markets were rattled by President Donald Trump’s threats to impose aggressive tariffs on the European Union and Apple Inc., with stocks getting hit, the dollar sliding toward its lowest since 2023 and bonds joining gains in haven assets.

The revival of concerns that higher levies could present a double-whammy of slower growth and higher inflation fueled the risk-off trade on Friday. The S&P 500 and the Stoxx Europe 600 Index each slid about 1%. The iPhone maker led a selloff in tech, dropping 2%. Treasury yields fell across the curve, with shorter maturities leading the move. Traders also rushed to haven currencies like the Japanese yen and the Swiss franc as well as gold.

Trump threatened a sweeping 50% tariff on the European Union and a 25% levy on Apple if the company failed to move iPhone manufacturing to the US, reigniting investor fears about his trade agenda. The president said in a social media post that the higher charge on the EU would start on June 1 because “our discussions with them are going nowhere.”

The sudden shift underscores the ongoing risk that shifts in US policy can abruptly upend market dynamics at short notice. Markets had rebounded in recent weeks on optimism that Trump was softening his approach to the tariffs and investor attention had shifted to concerns about the ballooning US debt and deficits

“It’s going to keep markets on edge,” said Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd. “Markets were hoping news on tariffs had abated until at least the 90-day pause expired, but that’s clearly not the case. Uncertainties are here to stay. We’re in for a period of very high volatility.”

The S&P 500 dropped 0.9%. The Nasdaq 100 slid 0.9%. The Dow Jones Industrial Average dropped 0.7%.

The yield on 10-year Treasuries declined one basis point to 4.52%. The Bloomberg Dollar Spot Index fell 0.6%.

The president’s missives represented a fresh round of trade brinkmanship, after indicating last week he was looking to wind down talks with partners over his April 2 duties, which he paused for 90 days to allow for negotiations. Trump’s attention this week has mostly been focused on a massive tax and spending package currently being considered by the US Congress.

To Capital Economics, Trump’s threat of a 50% tariff on the EU from June may well turn out to be a “negotiating tactic” and seems “very unlikely” to be where tariffs settle over the long run.

“At this stage, we are not inclined to change our working assumption that tariffs on the EU will ultimately settle around 10% but this underlines that there are risks and that the road to an agreement could be rocky,” the firm said.

The Trump administration’s fast-changing tariff policies have sent markets spiraling on recession fears and concerns about the safety of US assets, but they’ve rebounded as the president touted progress in tariff negotiations.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon recently warned against complacency in the face of a slew of risks, citing everything from inflation and credit spreads to geopolitics.

Short-dated yields priced in better odds that the Federal Reserve will cut interest rates twice by year-end to help the economy.

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